The Greed Merchants
How the Investment Banks Played the Free Market Game
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- $15.99
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- $15.99
Publisher Description
Early in the new millennium the investment banks were on their knees. Beaten by the boom and bust of the dot.com bubble, mixed up in corporate scandals and accused of uncontrolled and rampant conflict of interest, the game seemed over for the masters of the universe. Then the bounce back came. New rules, promises to be more vigilant and rising markets took the heat off. Having learned their lesson and paid their dues, the investment banks could be relied upon to oil the wheels of capitalism in this best of all possible worlds.
Philip Augar's cutting critique challenges this consensus. By being able to act simultaneously for buyers, sellers and themselves, they can generate huge returns at their customers' expense. This book explains how this systematic and legal transfer of wealth occurs and answers some important questions. Do the investment banks add value through their advice? Is there a cartel? Are there any alternatives? What will happen next?
PUBLISHERS WEEKLY
Augar's The Death of Gentlemanly Capitalism (2001) described how the cozy club of British merchant banking collapsed due to mismanagement and scandal. It was an insider's account; Augar was the head of Schroder Securities, a London merchant bank founded in 1804. (He sold the company to U.S. financial services giant Citigroup.) This book takes stock of similar doings on this side of the Atlantic. While many firms have met ignominious fates in the past few years, Morgan Stanley, Goldman Sachs and Merrill Lynch managed to avoid the worst of the scandals; through what Augar sees as superior management, they command investment banking. Three other firms, Lehman Brothers, Salomon Brothers (now part of Citigroup) and First Boston (now part of CSFB) proved "impossible to kill," making what Augar characterizes as huge errors but somehow surviving as a solid second tier. Finally, JPMorgan and Bear Stearns along with two European banks that made U.S. acquisitions, UBS and Deutsche Bank managed to find niche positions near the top. Despite the inflammatory title and cover, the author offers only mild and familiar criticisms: bankers are overpaid, the industry is too powerful and banks sometimes put their own interests above their clients (or one client's interests above another's). The heavy reliance on anonymous personal interviews of bankers gives a strong inside feel to the story, but one that undercuts its power as objective journalism. (On sale Apr. 25)
